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The development and Usage of Bitcoin ATM’s

The development and Usage of Bitcoin ATM’s

Bitcoin ATM’s allow people to purchase Bitcoins for cash. The world’s first Bitcoin ATM was unveiled at a coffee shop in Vancouver on October 29th 2013. It was an instant success and during the first month, it reportedly transacted almost 1 million CAD in digital currency.

bitcoin atm map

The machine uses a palm scanner to access individual Bitcoin accounts. People who do not have Bitcoin wallets can still transact using the ATM by creating an account on the spot.

Most people are familiar with the term Bitcoin, but for those who aren’t, Bitcoin is an unregulated virtual currency that runs on a peer to peer network. Bitcoins are accepted by certain merchants around the world. They can be purchased or mined and trade on an open market just like the stock market.

Bitcoin ATM’s are slowly gaining popularity and popping up around the world.

Bitcoin ATM regulation in the United States

Federal laws

Federal laws are put in place to prevent money laundering.

The Bitcoin ATM is defined as a monetary transmitter, and as such must comply with the rules of the Bank secrecy Act. FinCEN or the Financial Crimes Enforcement Network requires that money transmitters, which are money services Businesses (MSB) to create, follow and maintain an anti money laundering (AML) program and appoint an AML compliance officer. This involves identifying and tracking the activity of each consumer with regard to their business. All suspicious activity must be reported to FinCEN.

Anti- money laundering at bank level

You are required to provide some form of identification when you go to Western union to send money or a bank to transact business. These records are kept for audit or review purposes. All your previous transactions and activity are tracked.

Banks will most likely refuse to do business with a Bitcoin money transfer business that does not need any form of identification.

Merchants looking to set up a Bitcoin ATM should implement bank Grade Anti money laundering programs if they wish to partner with banks.

State laws on Bitcoin ATM’s

State laws are in place to protect citizens. Most states have not issued guidance on Bitcoin exchanges. New York is the first state to try to do so, by issuing what they term as a “Bitlicense”. This has been criticized for being overreaching.

In addition to Federal laws, States will;

Perform surprise audits on Money services business a few times a year.

Require a surety bond

Will perform a financial colonoscopy which is a thorough examination of your financial history

The challenges of the Bitcoin ATM

Most users have no problem using the ATM. Due to federal and state laws however; it takes a while to complete a transaction. A hand scan and identification is required which seems to deter many who are not very tech savvy and are interested in simply making a transaction.

Though it may have the best intentions, people today are cautious when asked for too much information and a hand scan and identification document basically means you have given away everything pertaining to your identity. If someone stole your credit card, it would be easy enough to call your bank and have them cancel it, as well as reverse the charges.

In the generation of hackers and irreversible Bitcoin transactions, there is nothing you could do if some unscrupulous individual got their hands on your information.

In order to facilitate adoption of this technology, the creators of the Bitcoin ATM need to simplify how these ATM’s are used as well as remove the “tech savvy” label that accompanies Bitcoin.

The Swiss Financial Market Supervisory Authority

Bitcoin Suisse AG has abruptly cancelled its launch of its newest Bitcoin ATM. The company stated that it was requested by the government to halt all services provided as well as suspend all planned launches pending clarification of legal questions.

Switzerland and banking are interconnected and the introduction and wide spread adoption of Bitcoin could have far reaching consequences.

The Future of Bitcoin ATM’s

Under banked parts of the world may benefit immensely through Bitcoin ATM’s.

Most of these countries have no access to credit cards and can therefore not make online purchases as easily as those in the first world.

Travelers would also be able to access their money and convert it into local currency without involving a bank.

While Bitcoin may have come into existence as an anti-establishment movement, users today see it as more than that. Bitcoin’s purpose is not to go against anything, but to provide citizens with the freedom to use their finances as they wish. Music, videos, messages, documents, anything and everything is easy enough to transfer without going through an intermediary. Why shouldn’t it be so with money without having to involve a bank?

If the Bitcoin ATM manufacturers are able to overcome the hurdles, it may be the beginning of a completely new era in financial services.